Monday, 16th February 2009 - 16:45CET

Moratorium on capital repayments by hotels announced

The government has reached agreement with the banks whereby they will grant a moratorium on capital repayments on pending loans by hotels, Parliamentary Secretary Mario de Marco said this afternoon.

"In this way hotels will have more cashflow to help them in these challenging times," Dr de Marco told a press conference.

Quoting the World Tourism Organisation, he said the current international situation was not a crisis in tourism, but a crisis which could affect tourism. People still wanted to travel but the economic scenario was affecting their ability to do so.

He said the moratorium was agreed in talks between the government, the banks and the Malta Hotels and Restaurants Association (MHRA).

MHRA president Kevin DeCesare thanked the government and the banks for this "well needed measure" . He said hotels could now concentrate on marketing to bring more tourists at a time when they were being more selective. He expressed confidence in Malta's resilient 50-year-old tourism industry and said he believed that within six to nine months the stimulus packages being introduced around the world, as well as measures being taken in Malta, such as the introduction of new air services, would help the local tourism industry.

The moratorium, in force for a year, will apply to all hotels which have invested to develop or refurbish their facilities. However it is not automatic and each case will be considered by the banks on a case-by-case basis, depending on track record. Banks also have to be satisfied that capital retained would be used in the best interest of the company.

The press conference was attended by representatives of the banks who underlined their commitment to support their clients, particularly in challenging circumstances.

Previous article • Enemalta publishes two-year-old accounts
Next article • Strong interest in energy equipment subsidy scheme

Article © Allied Newspapers Ltd., printed on Saturday, November 21, 2009. This article is for personal use only, and should not be distributed.

Comments

Abel Abela (on 17/2/09)

what's sauce for the goose should be sauce for the gander too

Charles Sammut (on 16/2/09)

"Quoting the World Tourism Organisation, he said the current international situation was not a crisis in tourism, but a crisis which could affect tourism. People still wanted to travel but the economic scenario was affecting their ability to do so." What a gem! Likewise, there is no crisis in car production or availability. But the credit crisis has affected demand for new cars. Which has slammed on the brakes on car production and jobs. And the vicious circle goes round and round. Politicians never fail to impress you with their convoluted logic. "He said hotels could now concentrate on marketing to bring more tourists at a time when they were being more selective." Which is a polite way of telling the minister that Malta is no longer attractive to discerning tourists. Don't we all know why? So we are pinning our hopes on "new air services" meaning low spending, cheep holiday makers. Let us hope that our banks don't go the same way as others have gone as a result of this not so camoflaged subsidy.

freddie vella (on 16/2/09)

This is a very sensitive issue. Although the government should assist businesses in difficult times, as these employ workers, it should not create an imbalance. Many hotels have separate integrated business running, such as restaurants, spas, beauty shops, and a whole array of other interests. With this move the govt is creating a competitive advantage for hotel shops and a disadvantage to the neighboring businesses.

Dominic Vella (on 16/2/09)

If the banks are being coerced to do this by political interference then let's watch their share prices go down. Who wants to own a bank where loans are not for risk adjusted profitable reason, but rather at the whim of politicians. However Joseph Gariboldi is right that if this is a state subsidy then the EU will not allow it. Take these factors together and what we probably have is an empty announcement about banks looking at extending loans on a 'case-by case' basis. Surely they do this anyway on every loan as part of their normal business?

Karmnu (on 16/2/09)

And what about the share holders of banks who are seeing their shares going down by the day? And the rate of interest for investors also going down rapidly. There are two sides to the coin.

Carlo Mifsud (on 16/2/09)

Do we really think this is a good (enough) measure? Can any hotelier guarantee now that with more cashflow hotels will move away from the practice of paying their suppliers after 6 months? Can we also get hotels to start saving on their energy consumption? How many hotels leave their lights on all night? A walk along st.georges bay would see all hotels having all their lights on till the early hours. How many hotels use the practice of asking their guests to re-use towels at least once (this happens in most 5 star hotels overseas before anyone comments)? i would have expected the ministry to promote malta better and attract more tourists rather than postponing payments that hotels will eventually still have to do! I would have also asked banks maybe to direct the interest and payments on these loans to people who want to invest in energy saving projects or similar initiatives.

d.attard (on 16/2/09)

This measure can only be beneficial in the very short term and must be supported by longer-term measures in support of the hotel industry. A quick rule-of-thumb analysis suggests that Government will be required to take over a part of private hotel borrowing by way of some form of mezzanine equity. The recession will be a long-term one and hotels need to be nimble at the end of it to be able to manouver in the actual circumstances prevailing at time of recovery. The same measure is needed in support of personal home loans of individuals who lose their jobs or a significant part of their income stream. This measure will benefit both the individual and the financial sector itself. These measures will only cost a fraction of percieved cost and the ensuing benefits will be major both during the hurricane recession and even more so when some form of normality returns.

A. Vassallo (on 16/2/09)

This moratorium on capital repayments to the banks by the hotels is a very welcomed move, and it is even more welcomed when all this came about with an agreement between the major stakeholders, that is, the banks, the hotels and Government. MHRA president Kevin DeCesare, rightly so, thanked the government and the banks and described this move as a "well needed measure”. He also said that this move will give hotels more chance to concentrate on marketing to bring more tourists to Malta. I hope that now Mr. DeCesare will also suggest to his members not to complain about their labour costs any more, which is the usual excuse to dismiss workers due to lack of cash flow.

J.Borg (on 16/2/09)

What about those people ending without work or on reduced hours.......

joseph gariboldi (on 16/2/09)

what about European Regulations against public help in private sectors?

Moratorium on capital repayments by hotels announced

Comments

Poll

Fun Stuff

	17 °C
Mostly Cloudy Feels like: 16.0°C UV Index: 3